Mitsui Sumitomo Insurance (MSI) has confirmed its plans to buy Transverse Insurance Group in a deal valued at $400m.

Transverse, backed by Virgo Investment Group, is a non-life hybrid fronting insurer serving the managing general agent (MGA) and reinsurance market.

The firm, which has the licence to operate in all 50 US states, was established by Virgo and co-founders Erik Matson and Dave Paulsson in 2018.

MSI, a subsidiary of MS&AD Insurance Group Holdings, look to leverage Transverse’s licence and MGA network to grow in the US MGA market, which is of MSI’s strategic interest.

The Japanese insurer noted that Transverse’s ability to retain risk allows it to share the risk and return with MGAs and reinsurers.

“MSI views the Acquisition to be a good opportunity to capture the growth of the US MGA market. In addition, as a result of the Acquisition MSI sees a number of potential synergies between MSI and Transverse including enhancing credit rating of Transverse and gain new business opportunities backed the MSI’s strong balance sheet,” MSI said in a statement.

The transaction awaits regulatory clearance.

Virgo founder and CIO Jesse Watson said: “We identified the fronting segment in 2018 as a growing and underserved market in which we could build a differentiated competitor, and are proud of how we built Transverse from the ground up to provide both MGA and reinsurance clients with innovative solutions.”

Transverse chairman, CEO and co-founder Erik Matson welcomed the deal, saying that the firm aims to utilise MSI’s global presence, balance sheet, and institutional expertise to strengthen its client offerings.